Joint Black Business Council & Business Unity South Africa statement on recent meeting

  • State of the economy
  • Areas of mutual interest
  • Common platform for business to engage

 

The Black Business Council (BBC) and Business Unity South Africa (BUSA) held an eight-a-side exploratory meeting on Thursday 4 April 2019, at which both organisations discussed issues critical to business.

 

The two organisations agreed on the need for a common platform for a business voice and have thus appointed a committee (four from each organisation) to explore the modalities of how that can be achieved.

 

The BBC and BUSA are equally concerned about the precarious state of the economy and will seek to work in a more aligned manner in engaging the government on the best way to navigate the country out of its current challenges.

 

Furthermore, both organisations are equally concerned about the slow progress in transforming the economy to realise the meaningful participation of black people and small business therein. Both organisations are in agreement that transformation is a critical enabler of economic growth in the country.

 

There was also common recognition of the negative impact of corruption and state capture on the economy and the functioning of the state. The BBC and BUSA are worried that this may have eroded public trust in both business and the government. The organisations will seek to play an active part in the search for a solution.

 

Both organisations are committed to rebuilding public trust by encouraging ethical conduct and leadership in business and society in general.

 

The organisations will be taking the issues raised at the meeting back to their membership with a view to obtaining input and mandate thereon, including crafting a way forward.

 

ENDS

 

About the BBC

 

The Black Business Council (BBC) is the overarching confederation that represents black professional, business associations and chambers. The primary purpose of the BBC is to lobby government on policy related matters and to play an advocacy role where policies are in place in order to accelerate the participation of black business in the mainstream economy.

 

About BUSA

 

Business Unity South Africa (BUSA) is the principal representative of business in South Africa. It is a confederation of unisectoral business organisations; corporate representative organisations; chambers of commerce & industry; and professional organisations. BUSA serves as an overarching structure representing business on cross-cutting issues relating to the economy, social policy, trade, the environment and transformation in national and international structures and bodies and is the representative of business at Nedlac.

 

JOINT STATEMENT BY PRESIDENCY AND BUSINESS UNITY SOUTH AFRICA ON ESKOM

Business Unity South Africa (BUSA) has assured President Ramaphosa of the business community’s support for current efforts to stabilise electricity supply in the country and to secure the sustainability of Eskom as a power utility.

BUSA has made a commitment to leverage its membership in order to place expertise, skills and technological interventions at the disposal of government and Eskom, to reinforce actions that are currently being implemented to stabilise Eskom and to secure the supply of electricity.

BUSA’s engagement on these initiatives will serve to complement and strengthen the work being done by the management and board of Eskom in partnership with the Special Cabinet Committee on Eskom chaired by Deputy President David Mabuza and the technical review team on Eskom that is led by Minister of Public Enterprises Pravin Gordhan.

BUSA offered its commitment to President Ramaphosa at a meeting in Pretoria on Wednesday 3 April 2019, when Minister Gordhan updated South Africa’s largest business federation on the challenges facing Eskom and actions that are unfolding to mitigate the immediate crisis and secure the long-term sustainability of the power utility.

 

BUSA is the largest business confederation in the country and serves as an apex structure for a broad range of organisations that represent various sectors of business. It represents business on cross-cutting issues relating to economic, social, trade, environment and transformation in national and international structures and bodies and is the representative of business at Nedlac.

BUSA views the revitalisation of Eskom as the single most important priority for the economy and underpins inclusive growth.

The organisation has proposed the creation of a collaborative platform where business, government and Eskom can work together to explore practical solutions to address the short-term operational challenges facing the utility.

This platform will enable regular and transparent communication with the business community, lend operational and technical expertise and solutions, as well as leverage available human capital by secondment or other means.

BUSA will engage with its members on issues, including demand management, that could help to reduce pressure on the national grid.

Wednesday’s meeting agreed that greater public and business confidence pertaining to the supply of electricity depended on improved co-ordination and communication within government around Eskom, and between government and business. This applied similarly to government’s communication with the nation at large.

The meeting welcomed the increasing frequency and depth of communication by Minister Gordhan and Eskom chair Jabu Mabuza on the utility and called for this effort to be intensified.

President Ramaphosa welcomed the initiative presented by BUSA in the spirit of Thuma Mina and said the new channel for greater transparency and the sharing of information would facilitate and encourage improved co-ordination among stakeholders that would assist in the day-to-day improvement of the current situation.

Media enquiries:

For the Presidency: Khusela Diko, Spokesperson to the President – 072 854 5707

For BUSA: mediadesk@busa.org.za

Issued by the Presidency of the Republic of South Africa and BUSA

Moody’s reprieve an opportunity to institute urgent reforms, says BUSA

 

  • Political stability required
  • Policy certainty must be prioritised
  • Credible plan for SOEs needed
  • Structural reform critical 
  • Pro-growth roadmap crucial  

 

Business Unity South Africa (BUSA) calls on SA Inc to effect the urgent and necessary economic reforms following Moody’s Investors Service decision to defer an announcement on the outcome of its review of the country’s sovereign credit ratings.

 

This is a welcome reprieve and ensures that South Africa will remain in the Citigroup World Bond Index, a key instrument which will enable the Government to continue raising much needed liquidity in the capital markets. SA Inc ought to take this as an opportunity to get its fiscal house in order and its policies aligned to a pro-growth and confidence-inspiring economic strategy, according to BUSA.

 

The five focus areas that BUSA views as critical in efforts to ensure South Africa retains its investment grade sovereign credit rating are: political stability, policy certainty, the reform of state-owned entities (SOEs), structural reform and a credible growth roadmap.

 

Political stability

In previous ratings reviews, Moody’s – as well as Fitch Ratings and S&P Global Ratings – had expressed concerns about political noise, noting increased pressure to pursue populist policies and on the country’s oversight institutions. With the General Election scheduled for May 2019, South Africa requires a political trajectory that inspires confidence in its ability to effect an economic turnaround. A free and fair elections process will also bolster confidence in the strength of the country’s institutions.

 

Thus far, the build-up to the General Election has been peaceful and all registered political parties have agreed to adhere to and subject themselves to the Electoral Code of Conduct.

 

In light of the ongoing Zondo Commission of Inquiry – and the testimony brought before it about political patronage and its role in state capture – and the recent signing into law of the Political Party Funding Bill, BUSA calls on political parties to be transparent about their sources of funding.

 

Policy certainty

 Land expropriation without compensation and the visa regime are two of the most significant policy issues that need to be comprehensively addressed. The Government needs to work with social partners in determining timelines, modalities and an implementation framework.

 

SOE reform

 Eskom remains the greatest risk to the economy and a comprehensive and an aligned position is required between the power utility and its stakeholders on how to effect a restructuring within the context of a broader overhaul of the energy sector.

 

In its monetary policy committee statement this week, the Reserve Bank revised down its growth forecasts for 2019 and 2020, citing weak business confidence and the potential resumption of load shedding. This highlights the gravity of the situation and the need for urgent intervention.

 

Structural reform

 South Africa’s skills and education framework remains out of alignment and continues to undermine the country’s growth potential. It has also been referenced by various institutions as a key impediment in realising the country’s growth potential as a developing economy.

 

Growth roadmap

President Cyril Ramaphosa released the Economic Stimulus and Recovery Plan in September last year. BUSA calls on the Government to move with speed on the establishment of an Infrastructure Fund and to work with all social partners, business in particular, in the formulation and implementation of the steps necessary both to inspire confidence and urgently reposition the country’s growth trajectory.

BUSA appeals to SA business to mobilise and assist in Cyclone Idai relief efforts

Business Unity South Africa (BUSA) calls on business to enjoin the humanitarian efforts currently underway in the Southern African Development Community (SADC) following the devastating effects of Cyclone Idai.

 

Parts of SADC States Malawi, Mozambique and Zimbabwe have been left devasted in the aftermath of the cyclone. On behalf of business in South Africa, BUSA extends its sympathy to all those affected.

 

BUSA acknowledges the Government’s speedy and appropriate response to the crisis and commends the various rescue and humanitarian efforts by South African organisations and actors.

 

“We know that some relief has been provided by South African companies that have operations in these countries. This moment calls upon all of us to lend our support to the humanitarian efforts currently underway, however small,” said BUSA President Sipho M Pityana.

 

BUSA encourages Members to support these humanitarian efforts: be it through financial donations or in-kind contributions, as advised by the various agencies on the ground.

 

BUSA advises that donations of items and goods, including clothing, food and water, may be made to the Department of International Relations & Co-operation (Dirco) in Pretoria.

 

Further information on how to assist can be obtained from:

  1. Gift of the Givers
  2. Penny Appeal SA
  3. Dirco: Companies that are able to assist are requested to contact:

BUSA CEO remarks at ILO and IOE International Women’s Day event in Geneva

 

Business Unity South Africa (BUSA) CEO Tanya Cohen remarks at the International Labour Organisation and the International Organisation of Employers (IOE) International Women’s Day discussion under the theme: ‘A quantum leap for gender equality: for a better future of work for all’, (11.00am-1pm), in Geneva.

 

 

Introduction

 

  • We are gathered here as women from different professional spheres under the umbrella the Future of Work and how best to ensure that women are included in this framework. Firstly, before delving deeply into the topic. I want to congratulate the ILO for turning 100 this year. This milestone coincided with the Global Commission Report on the Future of Work, with which we are seized at BUSA. In fact, we are in the process, together with others in the SADC Private Sector Forum, of developing a position in preparation for the International Labour Conference.
  • I am honoured to be here with you today, representing both BUSA and the IOE. BUSA is the apex business organisation in South Africa and represents a cross-section of business organisations, both large and small. BUSA is the business social partner on the National Economic Development and Labour Council (colloquially referred to as Nedlac). The thrust of our work is informed by our vision to create a transformed and inclusive economy through progressive policies. The IOE is the largest private-sector network in the world, with more than 150 business and employer organisation members in more than 140 countries, representing more than 50-million companies, large and small. The IOE is turning 100 next year.
  • Although International Women’s Day is not an official public holiday in South Africa, we celebrate Women’s Day on August 9 annually, which is a public holiday. We observe the day to celebrate and honour women’s role in the struggle against apartheid, as well as the historic women’s anti-pass march.
  • As we celebrate the milestones and breakthroughs women have made in multiple spaces, there a long way to go to inculcate a culture that is fully inclusive of women.
  • In South Africa’s case, the labour laws have improved progressively to incorporate pro-women policies, such as improved paid maternity benefits through unemployment insurance and paternity leave through basic conditions of employment.  In our country, employers are not permitted to discriminate against expectant mothers, nor are they allowed to take punitive measures against women who go on maternity leave. In fact, the law requires that women not be prejudiced professionally for starting families or choosing to have children. These provisions extend to women who also choose to adopt. Our employment equity legislation provides an explicit provision for equal pay for work of equal value, and additional recognition is given in the black economic empowerment codes for black women.
  • That said, we have a long journey ahead in removing the artificial and societal barriers that have prevented women from sitting on boards and becoming captains of industry.
  • The situation in South Africa in that regard mirrors that which has unfolded in the global community – there are too few women heading big enterprises and occupying boardroom seats.

 

 

The business case for gender equality

 

  • According to a recent, joint survey conducted by the IOE and the ILO Bureau for Employers Activities on women’s economic empowerment, women’s inclusion in the economy is an important factor to: build strong economies; establish more stable and just societies; achieve internationally agreed goals for sustainability and human rights; improve quality of life; and boost competitiveness and profitability.
  • All of those pillars are what inform and anchor BUSA’s strategy: a solid economy, stability and equality – although it is important to note that we do not explicitly identify women as central to this.
  • BUSA’s Business Approach to Transformation is cited as an example of enabling policy whose coherent approach could be used as a framework for the inclusion of women in the wider economy. We are incredibly proud of this.
  • In addition, enabling women to acquire qualifications and develop skills, and to join the labour market boosts incomes and wellbeing throughout the society. A woman-centric approach to economic growth has wider benefits for society including: raising healthier, better-educated children and the improved welfare of the family.
  • In South Africa, there are pockets of our society which recognise the benefits of creating an enabling and inclusive environment for women. We have what is called Bring a Girl Child to Work Day, when girls throughout the country experience the diverse world of work through the eyes of women role models in different fields, ranging from the arts and entertainment, to the corporate world and technical fields.
  • BUSA has also recently facilitated a number of initiatives in the Presidential Jobs Summit that will enhance the access of women to work. Notable examples in this regard include:
    • the KYB incubator project that aims to establish 2,400 women-owned early childhood development centres in Gauteng;
    • the commitment for the private sector to assist in the  training of nurses and community careworkers;
    • the access for women, along with men, to access finance for small business development through Finfind;
    • facilitation of pathways for youth to employment through Harambee; and
    • the agreement for the NBI to develop a practical framework on how to implement equal pay for work of equal value for larger employers.
  • International Monetary Fund MD Christine Lagarde[1] recently spoke to the Guardian and said that having more women in the workplace could boost the economy. According to Lagarde, employing more women and tackling sexism in the workplace is the key to making the world economy richer, more equal and less prone to devastating financial collapses. This is also supported by the OECD: OECD research shows that, on average, across its member countries, a 50% reduction in the gender gap in labour-force participation would boost GDP an extra 6% by 2030.

 

  • Practically, BUSA has lent its support to the African Regional Labour Administration Centre, which recently hosted a workshop on gender equality in the workplace and a high-level symposium on violence and harassment of women AND men at work.
  • BUSA, as the business social partner at Nedlac, is spearheading efforts for greater transparency on executive pay in South Africa, while also advocating for transformation in the broader economy.

 

Global Commission on the Future of Work report

  • The Global Commission on the Future of Work released its report in January 2019. BUSA endorses many of its principles, especially the focus on a human-centric approach. The inclusion of women therein should go without saying. BUSA notes, however, that a number of the proposals  in the report assume that comprehensive social security is available and affordable. With South Africa’s limited fiscal space, this is harder to achieve.
  • The Global Commission report envisages a number of transitions:
    • From profit and growth centred to a human-centred economy
    • From a command and control workplace to one based on sharing, learning, creativity and innovation
    • From a one size-fits-all approach, to customised practices that meet the individual and the employer (private sector or government’s) operating needs
    • From silo thinking to integrative thinking
    • From classroom foundational and tertiary education to platform connected and online training opportunities and lifelong learning
  • Building a brighter future involves investing in women and girls. Skills, knowledge and know-how – collectively known as human capital – have become an enormous share of global wealth, which is bigger than produced capital such as factories or industry, or natural resources. But human capital wealth is not evenly distributed around the world. How, then, can developing countries build their human capital and prepare for a more technologically demanding future? The answer is they must invest much more in the building blocks of human capital – in nutrition, health, education, social protection, and jobs. And the biggest returns will come from educating and nurturing girls, empowering women, and ensuring that social safety nets increase their resilience.[2]
  • Recommendation 3 of the report makes reference to gender equality: “Adopt a transformative and measurable agenda for gender equality by making care an equal responsibility for men and women, ensuring accountability for progress, strengthening the collective representation of women, eliminating gender-based discrimination, and ending violence and harassment at work.” It further states that gender equality starts at home. It is necessary to adopt policies that promote equal sharing of care and domestic responsibilities between men and women. Accountability for progress on gender equality needs to be ensured. BUSA and the IOE (the global network of employers which BUSA is a part of) agree with this reference.
  • There is a need, however, to do more research on the effectiveness of pay transparency and gender parity policies. Legislating is one part of the solution, but without implementation to deliver systemic empowerment it cannot be successful. Shifting centuries of discrimination and practices that have prevented women from participating fully in the world of work requires a multiplicity of approaches and interventions.

 

 

Evidence of progress made by women in the labour market

 

  • There is evidence of progress made by women in the labour market which needs to be acknowledged:
    • According to UN Women’s Annual Report 2016-2017, empowered women around the world are achieving some visible progress. The Annual Report cites various achievements for women, which have resulted from 72 adapted or amended laws to strengthen women’s rights in 61 countries and the training of 4,000 aspiring and elected women leaders in 51 countries.
    • With regard to the world of work for women, the World Economic Forum Global Gender Gap Report 2017 tracks the evolution of the overall Index since 2006 by geographic region. It highlights the local progress towards gender inclusion undertaken over the past decade in regions such as Western Europe, South Asia, Sub-Saharan Africa and Latin America and the Caribbean. Although more work needs to be done, in all world regions it records a narrower gender gap than the one observed 11 years ago.
    • According to the OECD Report on the Implementation of the OECD Gender Recommendations, there is some cause for optimism – although more women work part time and for low pay, women’s labour force participation rates have moved closer to men’s rates over the past few decades across the OECD.
    • According to the World Bank, the percentage of women participating in the labour workforce between 1990 and 2017 has increased in many developing countries and has increased overall in the Least Developed Countries, Sub-Saharan African countries and low-income countries.

 

What companies, IOE members and IOE are doing to advance gender equality and promote decent work

 

  • The IOE is a Steering Committee member of the Equal Pay International Coalition (EPIC), and last September 2018 made a pledge at an ILO side event in New York: ‘Strengthen our action to promote gender equality and non-discrimination good practices as part of our commitment to preserve and defend Fundamental Principles and Rights at Work, while paying special attention to gender-based discrimination in pay.’ Other organisations, governments and companies also made pledges to EPIC.
  • The IOE felt that it was important for it to be a part of EPIC because:
  • The work of EPIC adds value to the IOE’s own work on gender equality and diversity,
  • It provides a platform for the IOE and its member federations to express their views and ideas on how to tackle the gender pay gap, and
  • The ILO, UN Women and the OECD have the resources to better understand the barriers that women face and come up with policy action to tackle this issue at the global level. It therefore gives the IOE access to experts in the field and this will give them a chance to not only learn from the experts but to also give constructive inputs to their work from a business perspective.
  • Examples from other IOE members include:
    • Honduras Private Business Council: provides training and victim support for violence and harassment against women; it educates through a documentary of girls’ stories conveyed by leading actresses; and promotes entrepreneurship among women and youth business development services through Micro, Small and Medium Development Centres, promotes women’s entrepreneurship through the Gender Academy, fairs, business match making services.
    • Montenegro Employer Federation: has Employer’s Code of Ethics which binds all members to respect the principles of the UN Global Compact and the Sustainable Development Goals (SDGs), founded the Business Women Association of Montenegro to support women in entrepreneurship and management, it organises the Annual CSR Award Conference to promote good practices, including gender-related practices; and has developed an assessment mechanism for the “environment for women” which is regularly reviewed.
    • Iran Confederation of Employers’ Associations: has partnered with civil society by forming an umbrella organisation to promote gender equality in the context of the SDGs, offers international expertise and training opportunities to staff on gender equality.
    • Bulgarian Chamber of Commerce and Industry: is a member of the South Eastern Europe Women Business Angels Network (SEEWBAN) which aims to increase the number of Women Business Angels in Europe. Through SEEWBAN, different training courses are provided for female employees and their member affiliates. SEEWBAN facilitates the funding of Women Entrepreneurs by Business Angels. It has mentoring schemes for women professionals in place and participates in different CSR initiatives such as supporting women in the International Women’s Club of Sofia. It uses online platforms to enhance training and mentoring.

 

BUSA’s initiatives on gender equality

 

  • BUSA has devised an Ethical Code of Conduct to ensure that the organisation conducts its business in a manner that is transparent and fair. BUSA proactively ensures that is hires staff from diverse backgrounds and through the lense of ensuring gender parity in its skills mix.
  • BUSA follows Board guidelines in appointing representatives to external structures and opportunities. One of the criteria to be considered is demographic composition.
  • Some of BUSA’s members focus on the economic inclusion of women. BUSA supports these members by lending support, seeking opportunities for collaboration and providing strategic direction and opening doors that would otherwise be closed to them.
  • As mentioned earlier, BUSA, with the help of other social partners and its members, has through the Jobs Summit facilitated a number of initiatives that support gender equality and it is working to ensure transparency in executive pay and is part of efforts to ensure that the South African economy is transformed and inclusive.
  • We have been in exploratory talks with women in water, among others, to ensure that women are not left of the national infrastructure conversation.

 

 

Concluding remarks

 

  • The private sector, through the IOE, has been and can continue to play an important role in gender equality. It would, like many global challenges, require a holistic multi-stakeholder and multipronged approach, and BUSA stands ready to play an enabling and constructive role therein.
  • Thank you, once again, for inviting me to this event.

[1] https://www.theguardian.com/world/2019/mar/01/more-women-in-the-workplace-could-boost-economy-by-35-says-christine-lagarde

[2] https://blogs.worldbank.org/voices/build-brighter-future-invest-women-and-girls

BUSA and CCMA launch ground-breaking Web Tool for small business

Business Unity South Africa (BUSA) and the Commission for Conciliation Mediation and Arbitration (CCMA) have collaborated to launch a free-to-use Web Tool dedicated to help smaller businesses with labour relations processes and matters.

 

The joint initiative is one of the flagship projects outlined in the Presidential Jobs Summit Framework Agreement and has gone live following intensive testing and content mapping.

 

The project germinated from a BUSA study conducted in 2015/16, which showed that small businesses struggled with labour relations and that this was a key impediment to their formalisation and willingness to employ. Also, of concern – and a key spark to conceptualising the Web Tool – was that CCMA statistics reveal that an estimated 80% of the institution’s dispute cases originate from small businesses.

 

The joint BUSA-CCMA Web Tool has up-to-date information including the recent amendments to Employment Law that factor the National Minimum Wage Act, as well as contract templates, information sheets and guides on labour law requirements. Small business owners can utalise the user-friendly Web Tool to source information about: how to recruit; how to manage employees and build sound workplace relationships; how to end the employment relationship in a fair manner; and much more.

 

The Web Tool project falls in line with the National Development Plan’s (NDP’s) ambitious forecast that no fewer than 90% of new jobs will be created by small businesses. However, red tape and significant bureaucratic hurdles have been cited for the high failure rate of small businesses in South Africa, as well as the country’s low levels of grassroots entrepreneurial activities. BUSA and the CCMA believe this Web Tool will go a long way in unburdening small businesses from having to navigate through regulatory hoops.

 

In South Africa, many small businesses do not have in-house labour law expertise or the financial resources to comply with the complex administrative burden of hiring and managing staff. In addition, the cost of compliance is proportionately higher for small businesses. This often leads to non-compliance, a higher number of labour disputes and, at times, protracted court cases that are often detrimental to employment and the potential growth and success of small businesses.

 

How the Web Tool will help small business

 

The Web Tool is designed to:

 

  • Cut red tape and associated costs of labour relations compliance for small business
  • Contribute to workplace stability for small business owners
  • Improve employer and employee understanding of the Employment Laws
  • Improve legislative compliance and push for formalising small businesses

 

 

Value Add

  • The Web Tool is targeted at small businesses, but is generally accessible to the public free of charge
  • The Web Tool provides step-by-step guidance on employment law compliance requirements, and is a self-help tool that demystifies labour relations
  • The Web Tool minimises the need to find and pay consultants or labour lawyers for basic industrial relations processes

 

Project scope and future interventions

  • In late 2018, BUSA piloted the project on a focus group of small businesses to determine areas of interests and needs for future enhancement of the Web Tool were identified
  • The Tool may, with time, be extended into other areas to support small businesses gain access to information that is user friendly
  • The Web Tool can be accessed on: smelaboursupport.co.za

 

Web Tool main sections:

  • How to recruit, select, appoint and contract employees
  • How to manage employees during employment
  • How to end the employment relationship in a fair manner

 

Web Tool covers:

  • Contracts of employment and Basic Conditions of Employment for full-time, part-time and fixed-term contracts
  • Misconduct, incapacity and operational requirements processes and templates
  • Union representation and organisational rights steps
  • Strike or lockout steps and processes

Long term, the Web Tool will reside with the CCMA and BUSA to ensure on-going maintenance and updating as required, as well as exploring in future the possibility of embedding the web-based resource into a call center.

 

 

 

 

BUSA statement on Business Economic Indaba

Business Unity South Africa (BUSA) believes South Africa needs to accelerate its efforts to optimise the trajectory of the economy towards a growth path.

 

In that context, the BUSA leadership conceived of the Business Economic Indaba in late 2018, which is being convened today (Tuesday 29 January 2019) with its Members and the wider business community for an honest, constructive and dynamic exchange as to how we forge a partnership with government to drive an agenda for inclusive growth and transformation.

 

The Indaba has brought together leaders of business who with government will reflect on sector plans for inclusive growth through the Private Public Growth Initiative, explore the scope for collaboration to drive investment and how to address poverty, inequality and unemployment frankly and constructively, as well as map a future vision for the economy.

 

The Indaba will undoubtedly highlight: the governance challenges in state-owned entities (SOEs), the crisis confronting Eskom, deepening unemployment and inequality, rising government debt levels, underpinned by the increasingly restricted fiscal space, and the impending wave of disruption that will be brought on by the 4th Industrial Revolution (4IR).

 

BUSA is of the view that the operating models of SOEs are not only outdated, but also unsustainable, making these entities the single, biggest risk to the fiscus. The need for urgency and speed is particularly pronounced at Eskom, where the scale, depth and pace of reform are out of step with the magnitude of the crisis confronting the power utility. Of concern is that Eskom remains without a clear and coherent turnaround strategy.

 

The future sustainability of the economy is predicated upon addressing the marginalisation of the majority of our fellow citizens. The high level of unemployment, widening inequality and poverty are untenable. The suitability of the policy environment to address these challenges will no doubt be an area of focus. Business, together with other social partners, is looking to find lasting solutions to these. Identifying how small business can play its rightful role as a major contributor to employment and driver of transformation will also be assessed.

 

The risk of breaching the already high levels of the debt-to-GDP ratio is heightened by continued borrowing.

 

Focus will also be given to the importance of the 4IR, including the consideration of an appropriate policy response and framework to optimise South Africa’s ability to compete in this new world of work and create jobs of the future.

BUSA President Sipho M Pityana opening address at Business Economic Indaba

Programme Director, Hon Ministers,

Business Leaders, Members of the Diplomatic Corps,

Distinguished Guests, Ladies and Gentlemen,

 

I on behalf of BUSA warmly welcome you. We are most grateful that you heeded our call to join this important forum that is intended to re-affirm our commitment to partner with government and to generate ideas that will transform our economy and achieve the illusive inclusive growth.

 

This inaugural Business Economic Indaba follows my promise to the President, after the Jobs Summit, on your behalf as the business community, that we will gather thus in order to reflect on a litany of promises we’ve made in the course of the year to ensure we deliver our side of the bargain, identify additional ideas and contributions to advance our partnership.

 

As President Ramaphosa said at the World Economic Forum in Davos, we must all bemoan the fact that South Africa has essentially lost nine years of its life under his predecessor. If we use this opportunity wisely, those years will be a forgotten past. While we will never get back the lost years – we must be spurred on, to make up for the lost time, and to ensure that we get our economy, our democracy and our wonderful country back on track.

 

The Economic Backdrop

 

The transformation of our economy into an inclusive one is a key imperative for all of us gathered here. There can be no higher priority.

 

This is more so given the prognosis that South Africa’s economic growth will remain tepid this year, with high unemployment, while sluggish credit growth, which accounts for roughly two thirds of our GDP, will weigh on private consumption.

 

Weak economic growth will act as a headwind to fiscal revenues, thereby limiting the Government’s ability to render adequate public services, particularly in the education, health and social welfare areas.

 

All these factors and our poor rating on the ease of doing business as well as our decoupling from our emerging market peers, are set to act as continued headwinds to investment.

 

Disconcerting too is the prospect that the trade war between the US and China accelerates, or a harmful Brexit. With SOE debt remaining a continued challenge, economic growth would be constrained even more.

 

Given that the private sector accounts for more than 70% of economic activity, investment and employment in the South African economy; these economic challenges can only be resolved when Business, a critical stakeholder in any society, is clear about its role and intended contribution.

 

That, fellow South Africans, is the reason we are gathered here today: to clearly define our role and contribution to our economic repositioning, and for our nation’s success.

 

As the apex entity representing South African business, we as BUSA – with your help — must come up with the apex blueprint for how business will assist in driving the process of ensuring inclusive high economic growth.

 

We should therefore use this Indaba to identify pressing challenges and set the tone and narrative of how we can play our part.

 

President Ramaphosa has made a concerted effort to maintain sufficiently business-friendly policy to encourage foreign investment. Similarly, the President’s economic stimulus and recovery plan includes measures to improve the regulatory environment in critical sectors of the economy.

 

Over the past year, we have made huge progress in restoring the spirit of purposeful partnership among the key role players in the economy. Working alongside our partners in government, labour and the community sector, we have:

  • Rescued our economy from the brink of collapse;
  • Staved off further sovereign ratings downgrades;
  • Pledged tangible investment undertakings; and
  • Reached an accord to wherever possible preserve and stimulate job creation across our key economic sectors.

 

We should, without being complacent, take enormous pride in these achievements and the difference they are making for many families and businesses in our country.

But at the same time, we must also recognise that despite our GDP more than doubling from $139 billion in 1994 to $315 billion currently, millions of our economically active population remain on the margins of the economy, with no prospects in sight.

 

For me it is not enough to see growth in the national economy if your local economy is shrinking. It is not ambitious enough to have record jobs growth, unless those jobs are secure and delivering real growth in wages. And we are not fulfilling South Africa’s potential if, despite having world class and renowned learning institutions, we cannot turn their ideas into the products and services on which the industries of the future will be built.

 

Framework for Growth

 

Our country needs a new framework for growth. Given the waves of discontent pulsing through our country, exemplified through violent service delivery protests, it is clear that a substantial part of our society has, understandably, become embittered not only with the excesses in our political system, but also with those who hold economic power. If unchecked, this rumbling resentment and the feeling of despair could trigger populism that may reverse all our democratic gains.

 

In short, the level of inequality in our country is now an economic risk.

The answer is not to close ranks and protect each other at all costs. Rather, we should foster a genuine partnership that sets us on the path to transformed and inclusive growth.

 

Our genuine desire for partnership will be tested by our commitment to walk the journey, not only with Government, but our social partners in securing economic justice, particularly for the marginalised and the discontented.

If the notion of partnership is only about the creation of a conducive environment for business to thrive, important though that may be, we might be perceived as opportunistic, self-serving and indifferent to the real challenges of the day.

 

In short, when government and business sit down to talk, our conversation should be more than about business contracts — more importantly it should be about social contract. Business must define itself as a reliable partner with Government in delivering economic justice.

 

Economic Risk Mitigation

 

This moment of crisis can be used to build bridges and catalyse cohesion, to drive sustainable economic outcomes for all, through a public-private cooperation framework. This should be a framework that builds on the business sector and frees the markets as a force for sustained economic growth, yet always striving for the public good of environmental sustainability and social inclusiveness.

 

Equally, this framework must recognise that we are living in an innovation and artificial intelligence driven economy. Given our low ranking in digital skills, it is no exaggeration that we are unprepared for the magnitude of change that is required.

 

The 4th Industrial Revolution is upon us, and it will not wait for us to find our way. We must therefore plan, and plan properly, for the fundamental changes it will bring to how we live and work. With the unprecedented pace of technological change, it is apparent that our systems of education, transport, communication, health and manufacturing, to name a few, will be completely transformed from what they are today. This will require policy certainty on this front, in addition to the urgent need for developing new skills and rethinking our methods and models of education and work.

 

Together we must ensure a just transition to a low carbon, high-tech economy. And in doing so, we must cushion the vulnerable in our midst through income and redeployment support and access to retraining opportunities. It should be clear to all our leaders by now, that lifelong learning is going to be central, as technology advancements create a continuous need to upgrade skills.

 

Our new partnership framework must ensure that nobody is left behind. And it should be anchored on political maturity and ethical conduct. In developing our framework, and with a view to ensure integration with the global world, we must draw on the Sustainable Development Goals and the Paris Climate Agreement, which provide a roadmap for a zero-poverty and zero-carbon world.

 

What do we bring to the Partnership?

 

In articulating the key tenets of our partnership, I’d like to touch on five critical areas, our starting point being people and underpinned by Ideas, Infrastructure, Ease of Doing Business and Communities.

 

  1. People

 

We must strive to equip people with the means to earn a decent living. What is going to be our contribution as Business on this score? Beyond offering bursaries, we must develop pathways for graduates to earn experience in our respective businesses. For a country with low levels of educational outcomes, we can ill afford unemployed graduates or lose others to overseas markets.

We have inspiring examples on our doorstep. Our construction companies worked with the Government to create courses in construction skills in the run-up to the 2010 World Cup.

 

  1. Ideas

 

Our ability to develop new ideas and deploy them requires both the Government and the private sector to invest more in Research and Development. We need to do better in turning exciting ideas into strong commercial products and services and this requires investment in skilling our people. We must strive to build a South Africa that lives on the digital frontier.

 

What sacrifices are we going to make as Business to raise our R&D levels to 25% of GDP from the current 17%?  What R&D tax credits are we willing to settle on with the Government?

What are we going to contribute to ensure a world-class higher education system?

How many artisans are we willing to produce in the next 3 to 5 years to stem the tide of youth unemployment?  Among the graduates we’ve financed, how many are we willing to employ?

 

I am raising all these questions because we must bring tangibles to the Partnership with Government in line with our commitments to our social partners. If Government picks up the Shovel, we must be willing to shoulder the Pick.

 

  1. Infrastructure

 

The third area of intervention is around infrastructure, which is a critical underpinning of our lives and work. Having a modern and accessible infrastructure throughout our country is crucial to our high-growth ambitions.

 

Our infrastructure choices should not only provide the basics for our economy; it must support long-term productivity and link up people and markets to attract investment, while taking into account mega global trends. Providing the right infrastructure in the right places boosts the earning power of people, communities and businesses.

 

  1. Ease of Doing Business

 

With the right people, ideas and fit-for-purpose infrastructure, and working with our partners, we need to ensure that our country is the best place to start and grow a business. This requires competitive tax and regulatory regime and we should be welcoming to global talent and disruptive start-ups.

 

  1. Communities

 

Lastly, and while most South Africans are moving to cities to seek opportunities, we must ensure that development is evenly spread across our cities, towns and rural areas. This calls for more connected infrastructure and ensuring that land is available for recreation, residential and business purposes.

 

Conclusion

 

Ladies and Gentlemen, the time for moaning is well past. Now, we must focus on meaningful partnerships for change.

 

We must be clear about the role that, we as Business, will play in ensuring that our compatriots are ready for the opportunities of 4IR, while helping to mitigate its risks.

When millions of people are condemned to poverty; when thousands of graduates roam our streets with no job prospects; when our cities’ infrastructure is bursting at the seams due to rapid urbanisation fuelled by the paucity of opportunities on the countryside; when SME’s are driven out of business by monopolies and unfair business practices; when some businesses are paraded at the Zondo Commission for their active roles in corruption and the state capture project, it is clear that the current model must change.

 

To rebuild trust and restore confidence in our economy among both domestic and foreign investors, the challenge of building a Transformed and Inclusive Economy with strong ethical foundation, must be met.

 

I hereby declare this inaugural Business Economic Indaba open. We look forward to exciting ideas that would be up for vigorous debate and discussion.

 

Thank you.

 

Ends

 

BUSA comment on Q3 GDP outcomes

 

Business Unity South Africa (BUSA) notes the 2,2% growth recorded in the third quarter (Q3) of 2018. However, business cautions that this is a false positive because the underlying assumptions indicate that key sectors of the economy remain in distress.

 

The year-on-year (1,1) and nine-month (0,8) growth rates recorded in Q3 are of concern, as they signal that the economy is not picking up pace fast enough and point to a less than 1% annual growth rate for 2018. That is not enough for the country to lift itself out of the current economic slump it is experiencing.

 

The contractions recorded in mining, construction, electricity, gas and water, and gross fixed capital formation are warning signs that it is business unusual for SA Inc. All these sectors will be critical in ensuring that some of the goals set out in President Cyril Ramaphosa’s stimulus package are realised, particularly construction with reference to the proposed infrastructure fund. But the continued slump in construction brings into question how the infrastructure fund will be mobilised effectively to achieve its intended aim of sparking momentum in the economy.

 

The declining rates of gross fixed capital formation are also of concern as they underscore a lack of appetite to invest in the economy, which is a catalyst for growth. There is a correlation between gross fixed capital formation and sustainable economic growth. It is in that context that the low levels of gross fixed capital formation are worrying.

 

Sovereign Credit Ratings

 

In its latest monetary policy statement, the Reserve Bank revised down its 2018 growth forecast for the country to 0,6% from 0,7%. The Central Bank’s move was in line with the actions of the International Monetary Fund and the World Bank, despite a prevailing positive outlook for global economic growth.

 

Moody’s Investors Service, S&P Global Ratings and Fitch Ratings have all warned that the country’s future sovereign credit ratings hinge in its ability to grow the economy. South Africa is hanging on to its last-remaining investment grade sovereign credit rating by a thread, and business cautions that time is running out for the country to act decisively on required reforms to turn the situation around. BUSA urges that the moderate growth documented in Q3 does not lull social partners but spurs them on to take the urgent and necessary steps on the economy.

 

“Any bit of growth is welcome, but we caution against an unrealistic reading of what is an urgent situation in the economy.  We know what the issues are and the time for talking is over, we have entered a phase where we need to act swiftly and decisively and make the necessary changes, reforms and interventions required on the economy,” said BUSA President Sipho M Pityana.

 

Looking ahead

 

“We are particularly perturbed about the situation at Eskom, with reference to the introduction of power outages and their negative impact on the economy, as well as the power utility’s dire financial position. We cannot afford a repeat of 2008,” said BUSA CEO Tanya Cohen.

 

There is no fiscal space to bailout Eskom, or any other SOE, amid rising public sector debt levels and a runway state wage bill. We are extremely concerned about National Treasury’s ability to contain the Budget.

 

Address by BUSA President at Nedlac Summit

14 September 2018

 

Delivered by BUSA President Sipho M Pityana 

 

Transforming the Economy Through Inclusive Growth & Decent Jobs

 

Deputy President of the Republic of South Africa, Mr David Mabuza,

Minister of Labour, Ms Mildred Oliphant,

Deputy Minister of Labour, iNkosi Phatekile Holomisa (Ah! Dilizintaba)

Government, Labour & Community Representatives,

Distinguished guests,

All protocol observed,

 

Opening Remarks

 

There is little doubt that, as we gather here today, our country is at the threshold of a rapidly worsening economic situation. It is a domestic crisis amplified by a wider emerging markets meltdown, and implosion of the Turkish and Argentine economies.

This week, Argentina raised interest rates to 60% to try control inflation of more than 30%, as its currency sunk to new lows. In Turkey, a currency in freefall has pushed inflation close to 18%. Venezuela’s situation is even worse — the UN estimates that 2,3m people, roughly 7% of the population, have fled the country since 2015, hollowing out its economy.

The speed and severity of the current downturn has greatly increased scrutiny on developing countries vulnerable to this contagion and we – sorry to say – are near front of the queue.

The reality is that the providers of capital, including rating agencies, investment funds and financial institutions which fund so much of the day-to-day functioning of our state, are nervous. And this anxiety is growing as the market gains a greater appreciation of our complex economic and political challenges, for which no clear and cohesive national response is proffered.

While investors head for the door, leaving the rand spiralling and our borrowing costs soaring, our reaction leaves much to be desired. Instead of ringing in reforms to show we’re a good bet, there is an unproductive debate about whether or not we are in a technical recession.

Agriculture, manufacturing, investment and consumer spending, which account for more than two thirds of GDP, have underperformed.  The economy is haemorrhaging jobs at a frightening pace. Stats SA says the number of unemployed South Africans is up almost two-thirds since 2008, to 9.5 million people. Over the same period, the expanded unemployment rate increased to almost 40%. It’s hardly surprising that the World Bank report describes our country as the world’s most unequal.

It is even more worrying that we continue to decouple from our peers. While the IMF sees global economic growth of 3.9% this year, our economy is shrinking. This simply continues a long trend of moribund growth. Between 2009 and 2017, our GDP grew 1.6% a year against 5% for an IMF benchmark of 150 developing economies.

 

If ever there was a time to prove the efficacy of our social partnership, it is now. As NEDLAC we must remind ourselves that distinct mission: to find solutions to almost intractable national challenges, and to build a societal consensus that improves our prospects of being a winning nation. To do this we need to and maintain a relationship of trust and align on a shared vision, which we can collectively implement.

 

Business Introspection 

 

The business community recognised that it has to put its house in order.

Collusion inflates prices for no reason other than greed, it robs the poor and deepens our dire socio-economic problems. It must stop. So, too, corruption exposed by the Zondo and Nugent Commissions. Black Economic Empowerment, a noble endeavour to be sure, can never be an excuse for corrupt behaviour.

We must address excessive executive pay; encourage inclusive procurement; make meaningful contribution to a skills and employment revolution.

With improved policy certainty and a clear agenda for growth, we must lead the charge in deploying more capital investment, which will encourage foreign partners to follow suit. Most investment is reinvestment. Often, new money follows the experience of the old.

We can also cultivate our value chains in such a manner that they become more inclusive and developed with job creation and enterprise development in mind.

I would like to use this opportunity to call on business – big and small, black and white – to commit to work with our social partners to develop an Economic Recovery Plan for the South African economy. We simply have no time to waste. It is not only our duty as South Africans to act, but it is our fiduciary responsibility to recognise what Martin Luther King called, “the fierce urgency of now.”

But for this to happen, Mr. Deputy President, organised business has to be viewed as a valued long-term partner and generator of wealth and taxes. 

 

We can only agree that our economy is in a perilous state. The latest Reserve Bank’s Quarterly Bulletin puts debt-to-GDP at 50% versus 24% in 2008. This is before we take into account guarantees to SOEs. That’s worryingly high for a developing economy.

Investors look carefully at this measure to gauge a country’s ability to pay its debts. Borrowing is growing above this benchmark, interest costs are rise, diverting already-scarce capital from social spending intended to mitigate the lot of our poor citizens, to servicing debt. This is a debt spiral that many-a-household knows only too well.

We are likely to part with R163 billion to service interest on our R2,2 trillion debt burden this year.

As mentioned if we Include SOEs, our debt climbs to roughly 70% of GDP. Like me, you have, no doubt, been reading about a growing queue of SOEs seeking bailout from the fiscus. In Eskom’s case alone, total debt has risen to nearly R400bn over the past four years.

While we welcome and are encouraged by the reassuring anti-corruption tone and measures taken since President Ramaphosa assumed office, we are under no illusion that the leakage from our country’s coffers is likely to continue until good governance and accountability are restored.

With an economy either contracting or showing lacklustre growth, the capacity of the fiscus to generate more revenue to meet the growing and competing demands is clearly reduced. This is a structural economic conundrum unlikely to be resolved by a litany of platitudes and promises that raise false hopes. Not even the most militant demands are a solution.

This is a moment to look each other in the eye, confront one another with uncomfortable truths about how painful the journey ahead is likely to be, but also commit to finding solutions that will allow us to face our challenges with honesty and courage.

We need urgently to restructure the economy to achieve inclusive growth. This relies upon significant capital investment. Given our low domestic savings, we must agree with the President that we focus on attracting fresh investment to the economy.

Currently, the state lacks the fiscal capacity (space) to invest sufficient capital to turn the economy around. The envisaged stimulus package should be managed prudently to ensure the most optimal impact on the economy.  We must improve the management public expenditure towards a more sustainable fiscal trajectory.

 

Without addressing the systemic risk that these structural constraints pose to our economy, our growth ambitions will suffocate under their dead weight.

 

Investment Drive

 

Our President has rightly set an ambitious target of $100 billion in new investments. To realise this goal, a clear vision of our economic trajectory, with a clear action plan, is needed. No savvy fund manager or businessman will be lured by a slick sales pitch alone — they’ll look for the detail. They’ll look for clear action, before committing a cent.

This lack of a clear plan prompts the question: Does South Africa present a good long-term investment portfolio compared to other destinations? If the answer is currently no – then work done in advance of the Investment Conference and the actions that follow it, must enable us to unequivocally say YES.

We will host an Investment Conference in October, at a time when both domestic and foreign direct investment is on a steep decline. If we fail to emerge with a clear plan from this conference, it will be a lost opportunity and will severely undermine our credibility.  Its success is a national imperative.

As organised business, we have already made clear what we expect from President Cyril Ramaphosa’s relatively new government. It is a truism that capital is allergic to uncertainty, and in this regard, we urgently need clarity on issues such as land policy, the future shape of the financial sector, mining and telecommunications policy, and the laudable visions of the NDP.

 

Dysfunctional SOEs

 

To have any chance of achieving meaningful growth, we also require predictable and competitive delivery of services from our state-owned enterprises. These companies are large enterprises central to our economy, and it’s no secret that they’re in a deep crisis.

As demands grow for the injection of state capital in these failing state entities – can we justify diverting scarce capital from much-needed investment in healthcare and education?

If we do not have the fiscal space to bail out these ailing SOEs, we must ask ourselves what then do we do?

While we commend the laudable work done by government to remove discredited board and executive leadership, we urge it to adopt an uncompromising approach to employ in these crucial roles people with requisite skills and experience. Appointments based on political loyalties is what got us where we are today, and the same approach will produce the same results, even under the new dispensation.

As organised business, we have also made clear what we expect from our other social partners, labour and society. We expect a commitment to productive social dialogue and the creation of a practical and meaningful social compact. For all of us, this means making – and sticking to – commitments. It also means recognising that sacrifice is needed, if we are to turn this ship around.

 

An inclusive society

 

As business, we are under no illusion that in order to deal a decisive blow to poverty and inequality economic growth and transformation are indivisible.

The minimum requirement for achieving this kind of economic transformation is increasing the involvement of black people, youth, women and the disabled in the productive economy. That includes employment which is the most effective means of economic redistribution, ownership of businesses and their management.

Faced with the painful reality of an economy that is shedding jobs today, the forthcoming third Jobs Summit in October must reflect on the realistic measures needed to minimise, not only the looming prospect of more job losses, but also the businesses that are closing down in the face of these challenges. Roughly 1,800 businesses were liquidated last year, with the services sector of the economy hardest hit.

We must be a modern economy that is not built on cheap labour, but on highly educated, skilled and therefore more productive labour that is not only innovative, but capable of mediating technologies from other parts of the world. The Jobs Summit must pronounce itself on the future of work.

Minister Oliphant, we need enabling policy, created in partnership with business, to conscript as many people into internships, mentorships, and on-the-job training, as is humanly possible. We must also commit to making the structural changes that will continue to shift our economy away from the dominance of extractive industries and monopolies, towards one that supports labour-intensive growth and small and medium enterprises that are geared to meeting the needs of local and global markets.

 

Social Partnership is Imperative

 

To achieve these lofty goals, we must work together to find solutions. When the going gets tough, and the race, class and ideological divide seems too wide to cross, we need to appreciate that we are no longer at a place where anyone of us has the hegemony to impose their chosen pathway on the other without tripping all of us over. We dare not condemn future generations to our short term selfish objectives.

 

What can we learn from our past?

 

It is crucial that, in our desire to give hope to South Africans, to its business community, and to its investors, that we don’t paint an overly optimistic picture. We must be able to communicate a credible vision for the future and a strategy for getting there, persuading our compatriots to tighten our belts for a better tomorrow. Equally, while we take the bitter medicine, we must find ways to shield the vulnerable in our society from destitution.

As the chairman of a publicly listed company, which has most of its shareholders abroad, I can tell you that there is South Africa fatigue among investors. These are the large institutions which have for many years committed billions in risk capital to our private and public sectors, on the promise of reform, good governance and probity, and the commitment that our government will create the environment for business to flourish.

Just like our own people, they are fatigued at the lack of progress. They have grown tired of the dizzying number of commissions, probes, summits, panels, Phakisa and Indabas trotted out as an alternative to real, decisive action. Rarely, if ever, are these talk-shops followed up with tangible results that remove the barriers to investment, improve the business environment or demonstrate that those who break the law will be held accountable.

 

The Preamble of our Constitution enjoins us to “improve the quality of life of all citizens and free the potential of each person.”

 

Let’s us all work together to bring that to life.

 

Thank you.